Beyond Traditional Trade Agreements: A Proposal for Creating ‘Rules of Resilience’

With the long-term fate of the United States-Mexico-Canada Agreement in doubt, two trade experts are claiming to have identified a “critical gap” in the way such pacts are created and assessed.

Chris Meíja-Argueta at MIT’s Center for Transportation & Logistics and Gastón Cedillo at Texas A&M International University have teamed up to publish research that details a new way of determining how trade policy measures regional competitiveness. Agreements such as USMCA are customarily designed around the concept of where goods are manufactured and the amount of “local content” they contain. But that approach says nothing about a product’s predictability, security and ability to overcome infrastructure failures, says Mejía-Argueta, who directs the Emerging Market Economies Logistics Lab at MIT CTL.

The volatility arising from political tensions and constantly shifting trade policies are forcing supply chains to become more resilient, Mejía-Argueta says. With some 65% of raw materials located in developing economies in the “global south,” too few companies are considering the risks they incur by sole-sourcing critical parts in areas racked by turmoil and geopolitical strife. “We need to starting making new alliances with countries to keep operations going,” he says. “Not considering these factors creates a lot of issues.”

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